August 14 2007, 10:10

The Agrarian Sector of Ukraine Is Increasingly Subject to Interest of German Investors

Ukrainian agrarian market is becoming increasingly more and more popular for German investors, "News from Ukraine" tells AMI*.

In the future, this process will be more active, according to the interview with Stephan Kresse, Counsellor to German Ambassador dealing with agricultural issues, to "German Wave."

Of six billion dollars, which German companies invest annually in Ukrainian economy, about 40% accounts to agrarial sector.

German farmers grow grains, process vegetables and fruits, produce plant protection remedies, Kresse told. He let us know that until the end of the year the volume of German investments in the agrarian sector of Ukraine will increase essentially, as several large processing enterprises plan to enter the prospective market.

Kresse said, "The German company Henkel&Sohnlein has bought Kyiv Plant of Champain Wines recently. The Nordmilch Company, the second-ranked milk producer in German, has announced that it is looking for the place of its representation in Ukraine. The same is planned by Vion firm, the largest meat producer. Also, German butter producers are seeking opportunities and partners to start up their production in Ukraine. And these are serious investments."

According to his words, the southern and central regions of Ukraine are the most attractive for German investors, where farmers consider possibilities to set up their businesses.

"Frankly speaking, I cannot see in Europe a country comparable to Ukraine concerning potential dominating in agrarial markets. Recently, Ambassador and I took a business trip to the south. We saw huge sprinkers used to grow vegetables in Kherson oblast. It turned out that this region potential is equal to that of Spain or California. And this is only one region in Ukraine", the expert noted.

He explained that the interest to Ukraine enhanced among German businesspersons after political pressure reduction and work conditions improvement in the country. However, the expert remarks, the legal instability and state intervention into private economic activities remain the factors that among others continue to spoil Ukraine's image in the world.

Nevertheless, as Kresse notes, the Germans are ready to work in Ukraine. "German farmers are one of the most conservative layers of society in Germany. That is why their interest to Ukraine can serve as an example that will inspire other German businesspersons, primarily those who deal with agrarian products processing." To raise investments in Ukrainian agrarian sector, Kresse advises to excel the foodstuff to the level sufficient to enable them to be exported to any world country.

"One can only wish that the Ukrainian government would not refuse from numerous offers of European institutions to assist it in operation of laboratories, systems of agricultural products testing arrangement, also qutality assessment. This is the process which takes a lot of time and is a mandatory prerequisite to Ukrainian goods exports to European Union.", the expert notes.

The German specialist is convinced that after Ukraine enters World Trade Organization, the Ukrainian market will become more attractive for potential investors, because firm market rules will work there.

At the same time, in his opinion, "Ukraine will need to resign itself to the fact that imports of agricultural products, including cheese and meat will increase. That is why, to operate and to get a good price for one's products it is necessary to solve quality problems, in face of competition."

In contradistinction to numerous experts, Kresse does not think that Ukrainian farmers will lose after Ukraine's entering WTO because of low competitiveness of their products.

"Those who grow grains and fruits in the country, are competitive even now. Ukraine has consolidated itself as an exporter of grains, oil and other agricultural products. The longer an Ukrainian agrarian will be able to get good prices for products shipped, the longer he will be able to invest in his technical equipment, fertilizers, machinery. The German manufacturers of agrarian machinery and plant protection remedies have never sold their products in Ukraine so well as they do now. This is the sign of increase in investments, so one can expect yield and revenues to grow ", he emphasized.

At the same time., to Kresse's mind, the embargo for grain exports is not a market mechanism. "By introducing quotes to grain exports, the Ukrainian government has not given its farmers to earn this year. They lost about $ 30 by each ton of grains," said the Councellor to German Ambassador, who deals with agriculture issues.